American Association of the Deaf-Blind, Inc.

American Association of the Deaf-Blind, Inc. Financial Statements and Report of Independent Certified Public Accountants December 31, 2008 and 2007

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors American Association of the Deaf-Blind, Inc. We have audited the accompanying statements of financial position of the American Association of the Deaf-Blind, Inc. (a non-profit organization) as of December 31, 2008 and 2007, and the related statements of activities and changes in net assets, functional expenses and cash flows for the years then ended. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the American Association of the Deaf-Blind, Inc. as of December 31, 2008 and 2007, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. May 13, 2009 Linton Shafer Warfield & Garrett, P. A.

2008 2007 ASSETS Current Assets Cash $ 40,672 $ 42,199 Investment 189,737 177,292 Accounts receivable 10,831 28,736 Deposits 4,802 4,802 Prepaid expenses 1,928 3,771 Total Current Assets 247,970 256,800 Property and Equipment at Cost Furniture 5,353 5,353 Office equipment 26,615 25,229 Less: accumulated depreciation (28,544) (26,473) Net Property and Equipment 3,424 4,109 Total Assets $ 251,394 $ 260,909 Current Liabilities Accounts payable $ 1,997 $ 8,839 Payroll taxes withheld 4,431 3,992 Retirement payable 1,477 1,473 Accrued salaries and vacation 10,865 9,032 Total Liabilities 18,770 23,336 Net Assets AMERICAN ASSOCIATION OF THE DEAF-BLIND, INC. Statements of Financial Position For the Years Ended December 31, LIABILITIES AND NET ASSETS Unrestricted 216,297 234,162 Temporarily Restricted 16,327 3,411 Total Net Assets 232,624 237,573 Total Liabilities and Unrestricted Net Assets $ 251,394 $ 260,909 The accompanying notes are an integral part of these statements.

Statement of Activities and Change in Net Assets For the Year Ended December 31, 2008 Temporarily Unrestricted Restricted Total Revenues Contributions - UDS $ 580,968 $ - $ 580,968 Contributions 294,507 8,890 303,397 Grant income 5,000 10,500 15,500 Membership dues 4,850-4,850 Interest and dividends 6,989-6,989 Other income 15,956-15,956 Increase in cash surrender value of annuity 5,549-5,549 Released from restriction 14,277 (14,277) - Total Revenues 928,096 5,113 933,209 Expenses Program services 202,310-202,310 Supporting services Management and general 97,558-97,558 Fundraising 638,290-638,290 Total Expenses 938,158-938,158 Change in net assets (10,062) 5,113 (4,949) Net Assets - Beginning of Year 234,162 3,411 237,573 Transfer from unrestricted (7,803) 7,803 - Net Assets - End of Year $ 216,297 $ 16,327 $ 232,624 The accompanying notes are an integral part of this statement.

Statement of Activities and Change in Net Assets For the Year Ended December 31, 2007 Temporarily Unrestricted Restricted Total Revenues Contributions - UDS $ 579,969 $ - $ 579,969 Contributions - other 286,822 5,847 292,669 Grant income 17,500-17,500 Membership dues 17,470-17,470 Interest and dividends 6,522-6,522 Other income 805-805 Increase in cash surrender value of annuity 3,739-3,739 Released from restriction 2,436 (2,436) - Total Revenues 915,263 3,411 918,674 Expenses Program services 224,080-224,080 Supporting services Management and general 106,302-106,302 Fundraising 608,977-608,977 Total Expenses 939,359-939,359 Change in net assets (24,096) 3,411 (20,685) Net Assets - Beginning of Year 258,258-258,258 Net Assets - End of Year $ 234,162 $ 3,411 $ 237,573 The accompanying notes are an integral part of this statement.

Statement of Functional Expenses For the Year Ended December 31, 2008 (with comparative totals for 2007) Program Mgmt. & Fund- Total Total Expenses Services General raising 2008 2007 Salaries $ 111,447 $ 48,386 $ 12,123 $ 171,956 $ 162,499 Payroll taxes 8,528 3,703 928 13,159 12,648 Dental and health 6,612 2,871 719 10,202 8,661 Workers compensation 473 205 52 730 931 Retirement 2,337 1,014 254 3,605 4,250 Recruiting - - - - 375 Temporary help - - - - 82 Outreach coordinator - - - - 25 Telemarketing - - 604,341 604,341 584,465 Convention - - - - 556 Magazine - - - - 3,045 Travel 2,754 - - 2,754 4,240 Rent 20,404 8,858 2,219 31,481 30,416 Telephone 1,743 308-2,051 2,004 Office supplies 655 285 71 1,011 3,613 Accounting - 9,453-9,453 9,281 Technology - 1,530-1,530 3,850 Caging expense - - 12,129 12,129 10,922 Meetings 13,959 3,490-17,449 40,922 NTFDBI & Honoraria 11,746 - - 11,746 10,753 Insurance 1,818 1,817-3,635 4,255 Braille Services 1,828 1,827-3,655 4,913 Registration fees - - 3,575 3,575 3,583 Depreciation 1,342 583 146 2,071 1,792 Legal - 6,305-6,305 8,839 Bank charges 5,269 2,288 573 8,130 6,938 Parking 669 291 73 1,033 805 Postage 527 229 57 813 1,047 Membership fee 324 141 35 500 700 Multimedia Project 5,262 2,285 572 8,119 6,528 Interpreters 871 65 16 952 80 Printing 3,742 1,624 407 5,773 6,341 Total Expenses $ 202,310 $ 97,558 $ 638,290 $ 938,158 $ 939,359 The accompanying notes are an integral part of these statements.

Statements of Cash Flows For the Years Ended December 31, INCREASE (DECREASE) IN CASH 2008 2007 Cash Flows from Operating Activities Changes in net assets $ (4,949) $ (20,685) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities Depreciation 2,071 1,792 Increase in cash surrender value of annuity (5,549) (3,739) Changes in assets and liabilities Accounts receivable 17,905 (12,143) Prepaid expense 1,842 448 Payroll taxes withheld 439 100 Accrued salaries and vacation 1,833 (1,007) Retirement payable 4 - Accounts payable (6,842) 1,177 Net Cash Provided by (Used in) Operating Activities 6,754 (34,057) Cash Flows from Investing Activities Purchase of investments (6,895) (6,297) Purchase of equipment (1,386) (1,540) Net Cash Used in Investing Activities (8,281) (7,837) Decrease in cash (1,527) (41,894) Cash Balance - Beginning of Year 42,199 84,093 Cash Balance - End of Year $ 40,672 $ 42,199 Supplemental Information: Interest paid $ - $ - Income taxes paid $ - $ - The accompanying notes are an integral part of these statements.

1. Organization AMERICAN ASSOCIATION OF THE DEAF-BLIND, INC. Notes to Financial Statements December 31, 2008 and 2007 American Association of the Deaf-Blind, Inc., (AADB) is a Maryland corporation organized under the general nonprofit corporation law of the State of Maryland. The Association also qualifies under Section 501(c)(3) of the Internal Revenue Code, which allows operation as a nonprofit organization that is exempt from income taxes. The Association is a national consumer organization benefiting Americans with dual vision and hearing loss. They publish large type and braille magazines, organize conventions, and demonstrate new products to the deaf and blind. 2. Summary of Significant Accounting Policies (a) Basis of Presentation The Association presents its financial statements on the accrual method of accounting. Under this method, revenue is recognized when earned and expenses are recognized when incurred. The Association has adopted Statement of Financial Accounting Standards (SFAS) No. 117, "Financial Statements of Not-for-Profit Organizations." Under SFAS No. 117, the Association is required to report information regarding its financial position and activities according to three classes of net assets; unrestricted, temporarily restricted and permanently restricted. In addition, the Association is required to present a statement of cash flows. The Association s financial statements present the three classes of net assets, which are defined as follows: Unrestricted Net Assets - represent resources that are currently available for support of the Association's operations. Temporarily Restricted Net Assets - represent resources that may be utilized only in accordance with the restricted purposes established by the provider of such funds. When a restriction expires, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as funds released from temporary restrictions. Permanently Restricted Net Assets - represent resources for which the principal is to be maintained intact and the income, including appreciation in market value, may only be spent in accordance with the intent of the donor. The Association currently does not have any permanently restricted funds.

Notes to Financial Statements December 31, 2008 and 2007 2. Summary of Significant Accounting Policies (continued) (b) Property and Equipment The Association records depreciation on its furniture and equipment in accordance with generally accepted accounting principles. The Association's policy is to capitalize all expenditures for furniture and equipment in excess of $200 and that benefit more than one accounting period. Depreciation is provided on the straight-line basis over the estimated useful lives of the assets, which is five years. When fixed assets are retired or otherwise disposed of, the cost is removed from the asset account and the related accumulated depreciation is adjusted with the difference being charged to income as either a gain or loss on disposal. Maintenance and repairs are charged to expense as incurred. (c) (d) (e) Accounts Receivable Accounts receivable are stated at the amount management expects to collect from outstanding balances. If amounts become uncollectible, they will be charged to operations when that determination is made. Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents. Concentration of Credit Risk The Company maintains cash balances at two financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $250,000. There were no uninsured balances at December 31, 2008. The Association has not experienced any losses in such financial institutions and believes it is not exposed to any significant credit risk on cash.

Notes to Financial Statements December 31, 2008 and 2007 2. Summary of Significant Accounting Policies (continued) (f) (g) (h) Investments The Association has adopted SFAS No. 124 Accounting for Certain Investments Held by Not-for-Profit Organizations. Under SFAS No. 124, investments in marketable securities with readily determinable fair values and all investments in debt securities are reported at their fair values in the statement of financial position. Unrealized gains and losses are included in the change in net assets. Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Fair Value The Association adopted SFAS 157 Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements and establishes a hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 - inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. Level 2 - inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Notes to Financial Statements December 31, 2008 and 2007 2. Summary of Significant Accounting Policies (continued) 3. Officers Level 3 - inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. The Board of Directors are elected by the members for a term of four years. Officers for the year ended December 31, 2008, are as follows: Arthur Roehrig President Vincent Lee Clark Vice President Marilyn Fernandez-Trader Secretary Jeffrey Bohrman Treasurer 4. Support and Revenue Income to the Association consists primarily of membership dues, convention registration, grants and donations. 5. Lease Commitments The Association is currently occupying space in the building located at 8630 Fenton Street, Silver Spring, Maryland, which expires March 31, 2008. The base rent is $2,401 per month with 3% increases each year. The lease has been amended for a five year term expiring March 31, 2013. The base rent will increase each year by 4%. Total rent expense for the years ended December 31, 2008 and 2007 were $31,481 and $30,416, respectively. The Association s obligations under the leases are as follows: 2009 $ 32,741 2010 34,050 2011 35,412 2012 36,829 2013 9,297

Notes to Financial Statements December 31, 2008 and 2007 6. Fund-Raising Expenses The Association has contracted with United Deaf Services (UDS), a division of Heritage Publishing Company of North Little Rock, Arkansas, to conduct a public relations and fund-raising campaign in the Association's name throughout the United States. During 2006, the Association renewed their contract with UDS for the years 2007 through 2009. As stated in the American Institute of Certified Public Accountant s (AICPA) Statement of Position No. 98-2, an organization may allocate program, management and general, and fund-raising costs associated with a fund-raising activity if the following three criteria have been met; purpose, audience, and content. Since the Association has not met all three criteria, all of the costs of this campaign have been reported as fund-raising costs (telemarketing expenses) in these financial statements. 7. Retirement The Association has a Simple IRA Retirement Plan covering eligible employees. Eligible employees are those full-time and have one year of service with the Association. The Association matched up to 3% of employee s annual salary if they make a similar contribution to the plan. Employer contributions to the plan are vested when the contribution is made. 8. Investments Investments at December 31, 2008 and 2007, which are all considered level 1, consist of the following: 2008 2007 Certificate of deposit $ 69,821 $ 66,981 Life insurance annuity 119,916 110,312 Total Investments $ 189,737 $ 177,293 The Association invests in a professionally managed portfolio that contains an annuity fund and a certificate of deposit. Such investments are exposed to various risks such as interest rates, market and credit. Due to the level of risk associated with such investments and the level of uncertainty related to changes in the value of such investments, it is at least reasonably possible that changes in risks in the near term would materially affect investment balances and the amounts reported in the financial statements.

Notes to Financial Statements December 31, 2008 and 2007 9. Temporarily Restricted Net Assets Activity in temporarily net assets is as follows: Balance Transfer from Balance 12/31/2007 Unrestricted Revenue Expenses 12/31/2008 Advocacy and Awareness $ 655 $ - $ 1,491 $ 2,146 $ - NFDBI meeting - 6,747 15,600 11,606 10,741 Task force 147 775 - - 922 SSP meals and lodging 334 125 - - 459 Conference participants 2,275 (169) 1,774-3,880 Conference - general - 325-325 Braille materials - - 25 25 - Braille honorarium - - 500 500 - Total Temporarily Restricted Net Assets $ 3,411 $ 7,803 $ 19,390 $ 14,277 $ 16,327 10. Related Parties In 2008 and 2007, the Association s paid the husband of an officer of AADB for interpreting services. Fees paid to him were $718 and $945 for fiscal years ended December 31, 2008 and 2007 respectively.